Author Archives: Roger D'Ornellas

The Independent View: The con(s) of student fees and the increase in debt since 2002

By Roger D'Ornellas | Sat 18th July 2020 - 11:01 am

In 1998, Tony Blair introduced University Student fees with the assertion that the “poor” should not have to contribute (through taxation) to University Student fees for graduates who would likely become “wealthy” as a result of University education.

There are about 42 million people in the UK of working age ( 16 to 1 day short of 65 ). About 20% do not wish to work (inactive), about 4% are unemployed, about 20% do not earn enough to pay income tax, which leaves 56% who do pay income tax. Split that 56% into an upper half and a lower half. From this table (Income tax for % groups), the upper half pays approx 90% of income tax, the lower half 10%. The government receives taxes other than from Income (e.g. NI, Indirect taxes such as VAT, Corporation tax) – almost all 42 million people of working age will pay some of these taxes. Assume, therefore, that the “upper half” of income tax payers pays 75% of the total tax and the “lower half” pays 25% (for the purposes of this post ignore the rest).

Education spending in 2014 (i.e. it is after 1998, so university students are already paying some portion of their fees) was approx £84.7 billion, consisting of £10.4 on Universities, £37 on secondary schools, £26.1 on primary, £5.2 on under 5’s and £6 on “other” (all billion). The “lower half” would pay 0.25 x 84.7 = £21.1 billion of the £84.7.

The spending on secondary, primary and under 5’s = 37 + 26.1 + 5.2 = £68.1billion. If it is assumed that all of that £21.1 billion goes into secondary, primary and under 5’s, that covers only 31% of that spending but everyone uses that part of the education service. So the “lower half”, say, is half the users but covers only 31% of the spending even without the university and “other” spending. I won’t try to argue what percentage is fair for the “lower half” to pay but on this basis, the “upper half” is paying 69% plus all the university and other spending. I am not aware of Tony Blair ever justifying his assertion for introducing university student fees.